Become a Forensic Accountant
What is Forensic Accounting?
According to the Association of Certified Fraud Examiners (ACFE) forensic accounting is a combination of investigative skills and accounting knowledge that gives litigation support in cases of fraud. The word "forensic" means suitable for use in a court of law, and as a forensic accountant you'll be tasked with following the money trail looking for fraudulent activity and perhaps testify in court as to the path you followed in your investigation.
Whether you're planning your education in accounting or already have your Bachelor's degree and are working towards your Master's it's an excellent idea to take a hard look at specialized areas such as forensic accounting within the realm of certified public accountants (CPA). Because most states require both a Bachelor's degree and at least two years accounting experience before you can become a CPA it makes sense to focus your coursework, internships, and work experience in a specific area of accounting so you're ahead of the game by the time you qualify for certification.
The specialized area of forensic accounting is growing at a rapid rate and because the demand is high those who hold the Certified Fraud Examiner (CFE) credential earn over 30 percent more than CPAs without the certificate. Because the field of accounting is projected to grow at a healthy rate of 10 percent over the next decade those who hold the title of CFE will stand out from the crowd and will also most likely be in the top of the earnings tier for accountants.
What Does A Forensic Accountant Do?
Because the term "forensic accounting" is defined as the application of accounting evidence in regards to criminal evidence and legal proceedings it is to that standard forensic accounting investigations are held. Since forensic accounts are often called as professional witnesses to give testimony on their findings the position is a combination of accountant, auditor, and investigator. They may assess accounts presentations and accounting systems to determine whether the numbers mesh, assist in professional negligence claims to determine whether business persons acted in an ethical and legal manner, or may be tasked with investigating assumed or actual proceeds from fraudulent gains in order to determine the amount of criminal proceeds or negligence of those involved.
A forensic accountant may be used to quantify and calculate economic damages and losses through either contract or tort, to determine a business valuation, or to investigate disagreements relating to company buyouts, breaches of warranty, or acquisitions.
There are two main areas that forensic accounting encompasses: investigations and litigation support. On the investigative area they may be called to determine whether a criminal action has taken place such as security fraud, identity theft, employee theft, or insurance fraud. They may also be called to investigate hidden assets in civil matters such as a divorce case.
In the area of litigation support a forensic accountant is used to explain the factual presentation of the economic issues of a case in either pending or existing litigation. They are charged with quantifying the specific damages in legal disputes in order to resolve cases during mediation and may be called to testify as a professional witness if the case reaches the courtroom. This is what sets a forensic accountant apart from a CPA: they must not only collect the evidence of the paper trail but must be able to present it in a concise manner that is easily understood by the jury members and judge.
Forensic accountants must be suspicious number detectives. They must know legal issues and have the ability to apply their accounting knowledge to the courtroom. They must have a wide range of knowledge and talents to cover all aspects of an investigation. They may be asked to help with depositions, write reports, testify in court, assist in criminal and civil investigations, and conduct fraud investigations. Unlike fraud auditing which tries to anticipate a fraudulent situation, forensic accounting occurs after the fact when a company suspects theft, embezzlement, or fraud has already occurred.
What are Possible Careers and Duties?
There are five main areas where forensic accountants are employed: accounting firms, corporate security and risk management firms, law firms, financial consulting firms, and law enforcement. Here's a look at each area and the typical duties of their forensic accountants:
1. Accounting firms
Uncover fraud
Collect evidence
Perform computer forensics
Conduct interviews
Quantify financial losses in cases of misconduct
Translate technical jargon into common language
Testify as a professional witness in court
2. Corporate security & risk management firms
Ensure organizational compliance with procedures and laws
Analyze changes in taxes, exchange rates, law, and cultural attitudes in relation to their influence on profits and operations
Protect financial assets from external and internal threats, including economic circumstances and political issues
Audit financial statements
3. Law firms
Act as an consultant for financial issues
Assist in locating financial experts for use as witnesses
Conduct investigative audits
Translate complex financial reports into simplified language
4. Financial consulting firms
Investigate fraud, corruption, and regulatory scrutiny
Analyze and reconstruct digital information and financial records
Conduct interviews
Assess fraud vulnerability
Analyze embezzlement allegations
5. Governmental departments (FBI, CIA, IRS)
Build financial profiles of suspects
Investigate financial history of spies, criminals, and terrorists
Track sources of illicit funding
Gather evidence
Assist in the execution of search warrants pertaining to financials
Take part in financial interrogations
Compile financial investigative reports
Meet with prosecutors to discuss testimony and strategy
Testify as expert witness
Although there is no typical workday for a forensic accountant because the responsibilities are so wide ranging it's important to point out that being a forensic accountant doesn't resemble a television investigator who finds all vital information within minutes. As with other CPA positions most days will be spent behind a desk working with numbers. The main difference is that in civilian firms instead of balancing books and tax returns you'll be investigating for signs of wrongdoing such as fraud and embezzlement.
A career in law enforcement is much different for a forensic accountant as it is one of the fastest growing law enforcement fields. A prime example is the FBI as they are actively recruiting forensic accountants. As an FBI forensic accountant you may be tasked with a wide range of ever- changing assignments investigating major crimes such as:
Corporate fraud
Healthcare fraud
Securities and commodities fraud
Financial institution fraud
Mortgage fraud
The FBI also uses forensic accountants in:
Counterterrorism
Organized crime
Counterintelligence
Public corruption
Cyber-crime
Violent crime
As a law enforcement forensic accountant your duties would reflect legal prosecution of the criminal focus of the investigation in respect to their financial trail:
Perform research to track funds and identify assets
Conduct forensic analysis of various financial data
Prepare reports from financial findings
Prepare analytical data
Testify as needed
Forensic Accountant Salary Expectations
Currently, forensic accountants are in high demand, much like other accounting positions across the United States. As with most professions, your salary and lifetime earning potential in this field are determined by a couple specific factors. These factors are: the highest level of education obtained and experience. According to BLS.gov "Employment of accountants and auditors is projected to grow 10% from 2016 to 2026, faster than the average for all occupations. In general, employment growth of accountants and auditors is expected to be closely tied to the health of the overall economy."
1. Average Salaries by Cities:
Albuquerque, NM: $51,600
Boston, MA: $66,000
Chicago, IL: $60,678
D.C.: $71,900
Dallas, TX: $59,500
Houston, TX: $63,000
Los Angeles, CA: $80,500
Miami, FL: $69,200
Orlando, FL: $57,400
Philadelphia, PA: $73,200
San Diego, CA: $71,200
San Francisco, CA: $64,200
*Salaries provided by PayScale
Education and Degree Options
For a career in forensic accounting you should plan to earn at a minimum a Bachelor's degree and preferably a Master's degree in order to qualify for the widest range of positions. Because most state require a minimum number of accounting courses as part of your educational requirements to become a CPA you should plan your education accordingly with forensic accounting as your end goal. You should first determine that your school of choice is accredited then find the CPA requirements for your state. Any internship should encompass forensics if possible, and once you've earned your degree and passed the CPA exam you should try to gain your required experience in the forensic accounting field while qualifying for your CPA licensure.
Note that while most firms as well as law enforcement doesn't always require you to be a CPA in order for you to become a forensic accountant it is preferred, so you should make becoming a CPA your first educational goal. The American Institute of Certified Public Accountants (AICPA) recommends future forensic accountants complete the Fundamentals of Forensic Accounting Certificate Program which is a 12 module course; you should take as many forensic accounting courses available while earning your degree. Note that because forensic accounting is the legal and investigative aspect of the accounting field it may be a wise choice to declare criminal justice as your minor so you can take courses related to your long term goal. Here are some sample courses that fall in the forensic accounting category:
Understanding the Basic Structure of the Legal System
Managing the Forensic Engagement
Identifying and Obtaining Evidence
Conducting Effective Interviews
Common Investigative Techniques
Deposition and Testimony
Calculating Intellectual Property Infringement Damages
Family Law Engagements
Fraud Prevention, Detection, and Response
Financial Statement Fraud and Asset Misappropriation
Valuations in Litigation Matters
Auditing and Forensic Accounting
Detection/Prevention Fraudulent Financial Statements
Interview Techniques/Legal Aspects Fraud
Investigating with Computers
Read more on forensic accounting degrees and certification
Certification Credentials and Licensure
Besides qualifying for your state CPA licensure you should also plan to earn your Certified Fraud Examiner (CFE) Certified in Financial Forensics (CFF), or both.
The CFE is determined on a point basis. Education, experience, and certifications are all taken into consideration so if you have a forensic accounting bachelor's degree and CPA licensure your only requirement is two years experience in an area specific to the detection or deterrence of fraud. This is where your internship and CPA experience requirements can help you save time on your path to becoming a forensic accountant. The following areas of experience are accepted:
Accounting and Auditing: with certain responsibilities for the detection and deterrence of fraud in specific areas
Criminology and Sociology: professionals with education or research in the fraud and white-collar crime dimensions of criminology or sociology
Fraud Investigation: Experience in the investigation of civil or criminal fraud, or of white-collar crime for law enforcement agencies or in the private sector
Loss Prevention: Security directors for corporations and associations who deal with issues of loss prevention or security consultants dealing with fraud-related issues may claim this experience
Law: Candidates with experience in the legal field might qualify if experience deals with some consideration of fraud.
The CFF credential is granted by the AICPA to qualified CPAs. To sit for the CFF exam you must meet both educational and experience requirements as follows:
Education: CFF candidates must have 75 hours of forensic accounting continuing professional development (CPD) within the five year period preceding the date of the CFF application.
Business Experience: CFF candidates must have a minimum of 1,000 hours of forensic accounting business experience within the five year period preceding the date of the CFF application.
While neither forensic credential is required to work as a forensic accountant you should plan to earn at least one. You should also look at the specific experience preferred by your employer of choice while working on your experience requirements. For example, the FBI prefers to hire those with a Bachelor or Master's degree, hold CPA licensure, and hold certification from CFE or CFF as well as experience in the following areas:
FBI Preferred Professional Experience
Forensic Accounting
Public Accounting
Government Accounting/Auditing
Corporate Accounting/Internal Auditing
Litigation Support and Dispute Services
Financial Services Industry
Most states require Continued Professional Education (CPE) once you hold your CPA licensure so you should plan to use this requirement to your advantage to keep abreast of new developments in the world of forensic accounting.
To end up being a forensic accountant, one have to have gotten a minimum of a bachelors level in audit, yet many forensic accountants have a masters level. Various schools likewise offer students the alternative to go after a bachelor's degree in forensic accounting. Institutions also provide programs for a forensic accounting certification, which includes courses such as:
Meeting Methods as well as Lawful Facets of Scams
Concepts of Forensic Accounting and Fraud Exam
Checking out with the Computer system
Detection and also Avoidance of Fraudulent Financial Statements
These programs will enable the pupil to qualify to sit for the Licensed Forensic Accountant (Cr.FA) examination as well as the Certified Fraudulence Inspectors (CFE) test. These are internationally identified qualifications in the anti scams as well as audit profession. Picking the right forensic accounting bachelor's program normally requires some forethought, research, and preparation. Learners interested in specific job areas such as fraud prevention and also financial investigation must identify programs that use matching focus and also courses. Applicants ought to think about schedule restraints as they select whether to pursue their degree part-time, full-time, or at a sped up rate.
Inspired students with disposable time often select sped up bachelors program alternatives, while working grownups usually locate part-time and/or online programs best for their busy routines. On the internet programs include the same curricula as on-campus programs, yet they frequently allow pupils to examine throughout after-work hours. However, online understanding may involve less collective knowing, networking, and also mentorship. Some students select hybrid programs, integrating on-campus and on the internet participation formats.
Working pupils that choose on-campus presence may pick programs with evening or weekend classes at neighboring schools. Those planning to operate in specific locations or areas could take advantage of participating in local, well-known schools. Applicants available to relocation might take into consideration programs that would certainly bring them to high-opportunity areas for forensic accountants. Several forensic accounting bachelor's programs require internships, which help trainees acquire work experience and build their specialist networks. Learners enrolled in programs accredited by the Council of Colleges approved companies might qualify for federal help.
A lot of pupils make their online forensic accounting level in 2 years or fewer. The size of time you spend depends on different variables, such as whether you attend full-time or part-time as well as when your college ensures courses offered. A required teaching fellowship or practicum can additionally influence the quantity of time it requires to earn your master's degree, as it may require you to invest a specific amount of time in a practicum before finishing.
Additionally, some programs allow you to register in classes at your own rate, which can allow you to finish your level at a much faster price. Trainees who establish their very own timetable usually enlist in even more courses each term and also in some cases graduate early. Most graduate-level on-line forensic accounting levels call for in between 32 and also 46 debts, relying on the structure of the program as well as its needs.
Essential Guide to Forensic Accounting
What are the standard features needed of a Certified Fraud Examiner (CFE) in order to get approved for The Vital Guide to Forensic Accounting? These qualifications were established as a means of recognizing employees that are best able to appropriately perform their tasks as well as are consequently most likely to safeguard the stability of any type of business that utilizes them.
The majority of the requirements needed for The Necessary Guide to Forensic Accounting belong to different kinds of cases, such as jobs involving insurance fraud, tax scams, supply scams, as well as related crimes. But various other CFE requirements include the expertise of the appropriate manner of evidence that should be utilized when a claim is being presented in court. Too, the capacity to collect and also analyze evidence in a way that will certainly allow the supervisor to precisely present his or her searchings to the court is also a requirement.
The Important Overview to Forensic Accounting supplies CFE's a practical foundation in order to end up being extremely reliable and also valuable members of the accounting area. CFEs have to pass written and also real-life examinations as well as fulfill various other CFE efficiency requirements.
While it holds true that all Certified Scams Examiners (CFEs) have to be appropriately certified by a recognized organization, not all CFEs need to possess the necessary qualifications. Some CFEs, for instance, might be eligible for the Professional Certified Scams Supervisor (PCFE) classification, which has actually been provided by the International Association of Qualified Scams Inspectors (IACE).
A private with the Expert Qualified Scams Supervisor (PCFE) designation is able to apply the very same criteria of conduct that apply to Qualified Scams Analysts as well as Qualified Public Accountants which are applied to Certified Economic Professionals. Furthermore, the PCFE is able to apply those requirements to the role of a CFE as well.
Any CFE that is eligible for the PCFE designation can after that use the criteria in conducting a trial and conducting an examination on a person believed to be devoting fraudulence, consisting of financial fraudulence. Additionally, a specific with the PCFE designation will be provided with added tools and resources that are normally only offered to law enforcement officials as well as other monetary fraud professionals.
One of the requirements for becoming a Licensed Forensic Accountant (CA) is to efficiently complete an unique examination or test called the Qualified Scams Examiner (CFEO) test. This examination requires the prospect to carry out a set of real scams scenarios which should be done under the direct guidance of a Certified Scams Supervisor (CFE).
Generally, the examination concentrates on preparing a candidate to properly determine a deceptive task that is related to any type of economic scams, from home mortgage fraudulence to stock scams. Instances of deceitful task that this test covers include:
What does it take to end up being a Certified Fraud Analyst (CA)? It takes a prospect that fulfills the aforementioned CFE needs and also the CFEO examination requirements to pass the test, nonetheless, as stated over, there are numerous CFE alternatives that can be granted the Expert Licensed Scams Examiner (PCFE) classification, which can additionally be considered a CFE.
In addition to the CFEO examination, the American Institute of Licensed Scams Supervisors (AICFE) offers a collection of courses that are specifically created to supply prospects with the expertise they require to successfully pass the CFEO examination. Once the CA test is passed, the CFE can begin applying the knowledge acquired from this class to become a Certified Fraud Analyst (CA).
Lots of CFEs that gain the Expert Certified Scams Examiner (PCFE) classification or a CFE credential are additionally licensed with the National Organization of Fraudulence Inspectors (NAFEE). In fact, a variety of fraud examiners in different states elect to be certified through NAFEE.
The subjects covered by the Certified Scams Examiner (CFEO) examinations consist of fraudulence situations that include company fraud, intellectual property scams, customer scams, insurance policy fraudulence, supply fraud, business-related fraudulence, computer scams, cash laundering, structured settlement scams, and white-collar crime. A private accredited via the NAFEE might have the choice of picking to choose from one of two different CFE tests - one that is created for a legal context as well as one that is designed for a scams context where he or she is collaborating with business or public wrongdoers.
For much better or perhaps worse, there's never been a much better time to be a forensic accounting professional. Over the last few years, monetary reports like the Madoff Ponzi system, Lehman Brother or sister's falsified fundings, and likewise the Samsung bribery case, have actually shown exactly how vital experienced, seasoned economic investigators truly are. In the duration of globalization, Big Information, as well as deregulation, there's a good deal of temptation to make a rapid buck or utilize consumer dependence for a bigger cash advance.
Nevertheless, it's not all fraud and additionally deception. Accepted, that's the fascinating points, yet forensic accountants have a responsibility in all kinds of financial, business, along with lawful configurations. Forensic accounting specialists assist financiers do their due diligence, analyzing bargains to suss out potential deceit. They look into bankruptcies, mergers, and additionally procurements, to make sure all events entailed are exposing their cards.
On top of that, she or he will provide what is referred to as investigative accounting. This can include jobs related to insurance or safeties fraudulence, wrongdoing appropriate to kickbacks, employee burglary, and also a lot more. A forensic accounting expert will certainly need to possess auditing abilities to perform detailed examinations of complicated financial records and also accounts, and additionally she or he need to be offered to interact with other members of the legal examinations team to maintain them approximately day as advancements occur.